As companies reduce pensions and retirement planning options, more and more adults are turning to private retirement accounts to fund their post-work years. This trend has some advantages, like that it allows investors to have more control over their accounts.
It is important that you understand the different types of accounts and how each one functions to find the best fit for your needs. If you have been wondering whether to invest in an IRA vs annuity, here are some points to know about each to help you make a decision.
This type of accounts offers a reliable source of income over a set period of time. They can be funded gradually or all at once. Generally, gains on the money invested are tax-deferred until you withdraw them. You may start receiving payments right after your annuity is funded regardless of your age, or you can choose a deferred payment option.
Individual Retirement Accounts
An IRA basically serves as a private bank account where you can deposit money. There are two main types of IRAs: traditional and Roth. Depending on the type of IRA you set up, you may be required to withdraw funds from the account when you reach a certain age,
There are many considerations when you are planning for retirement. Both IRAs and annuities can be attractive options. it is best to work with an expert to fully understand the requirements and benefits of each so you can choose a plan that best matches your goals.